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Kinetic Energy - St. Paul Pioneer Press Article

Building on the momentum of his company's software-enhancement business, the co-founder of Kinetic Data hopes to branch out with new IT products.

By Leslie Brooks Suzukamo, Pioneer Press

There's something satisfying about having a tangible product you can point to and say, "That's mine!" John Sundberg got a taste of that soon after he left 3M and started Kinetic Data in St. Paul in 1998.

He found a copy of a mountain bike video game he developed for Activision on the shelf of a local CompUSA store. "I told the guy standing next to me, 'Hey! I wrote that game!' He was not quite as impressed as I was," Sundberg recalled wryly.

That was his only foray into video games. Sundberg turned Kinetic Data into a technology services company that makes money by helping businesses install, maintain and manage the applications of BMC Software, a $1.5 billion company based in Houston, Texas.

But he never forgot the thrill of having his own products.

So Sundberg is hoping that a series of BMC-related software applications his startup developed will take Kinetic Data to the next level, making it less of a services company and more of a software products vendor.

"That's where my heart is, in products," he said. "I want to build products that can help lots of companies at the same time."

Kinetic Data works with software that manages business processes, a pretty wonky niche even for the IT industry.

Business processes are, for the most part, invisible. They involve normal, everyday functions that keep a business running—getting a new employee a chair, desk, phone and building pass, for instance, or replacing a broken computer.

BMC's software automates those processes, particularly for IT departments. Eight out of 10 Fortune 500 companies use its products.

Sundberg became acquainted with BMC while working in IT at 3M. BMC's best-known product, nicknamed "Remedy," handles what he calls "lightweight processes"—the easy-to-do chores that become maddening to track inside a company because there are so many of them and they usually require multiple phone calls or faxes to complete.

Streamlining such a process could lead to serious savings, Sundberg said. He said the company's flagship customer, for instance, receives 60,000 requests every year for hiring or relocating employees. Shaving one phone call out of the routine for each request could save the company $1.8 million a year in employee time and productivity, he said.

So Kinetic Data developed several software products that sit on top of the BMC platform and try to improve upon the processes.

"We like to say that it's easy to add on, so when you upgrade your existing software, you upgrade friendly," Sundberg said.

One of its best-known products is called Kinetic Survey, developed two years ago and named because it surveys people inside companies about their experiences trying to get a job done.

General Mills' information services department has been using Kinetic Survey for about one-and-a-half years to get feedback on the efficiency of its help desk analysts, particularly in their first three months on the job, said Richard Brooks, of the company's services and infrastructure management team.

The Kinetic product is so secure that General Mills' IT managers use it to survey their employees for their own "360 degree" performance reviews, Brooks said. Other departments inside General Mills have asked about using the survey tool for their own purposes, he added.

Since Kinetic Survey, Kinetic Data has added more software that allows the company to integrate BMC's systems with the data stored on systems from other companies.

Kinetic Data's new emphasis on products is showing up in its revenue. In 2006, the company derived about 20 percent of its $2.7 million in revenue from its software products, up from only 5 percent in 2005. This year, Sundberg said he would "like to pass $3 million" in revenue.

Sundberg believes more reliance upon software products will bring more predictability to Kinetic Data's revenue stream, since software vendors typically rely upon a steady stream of revenue from maintenance contracts with their customers.

But he's also learned that when it comes to buying software, large companies can be tough customers, with sophisticated criteria and long waiting periods between upgrades.

Kinetic Data's next challenge is to put more into marketing its products, he said.

The company recently hired a director of marketing and partner programs and a director of product marketing, bringing its total to 18 full-time employees, up from its original three in 1998.

Servicing customers is still the company's "bread and butter," but products can serve many customers, Sundberg said.

"I prefer to build solutions that can be used over and over and over again," he said.

Leslie Brooks Suzukamo covers telecommunications, technology and energy. He can be reached at
lsuzukamo@pioneerpress.com
or call 651-228-5475.

About Kinetic Data

Kinetic Data creates software that delights our customers, makes them heroes, and transforms both the organization and the people who work there. Kinetic Data has been doing this for 15+ years and the formula is known, repeatable and ready for consumption.